SaraEA

I wouldn't blame ATX. The scammers probably got the contact info from the IRS's public preparer directory. I got the same email and haven't used ATX in some time. Is there a way to opt out of the directory? I don't want or need and can't handle any more new clients. Especially the cranky ones who come in this time of year. They're disorganized (which is why they're so late), typically owe lots of money (which is why they avoided coming in earlier) and IT'S ALL OUR FAULT.

Refund anticipation checks are not "advances." Refund anticipation loans (aka RALs) were advances, where the bank loaned the taxpayer the refund before the IRS paid up. Clients got their refund in a day or two, at usury fees, and the bank took the risk that the refund would actually be paid by the IRS. It was actually little risk because the IRS had a "debt indicator," letting the bank know if some or all of the refund would be taken to pay back child support, student loans, etc. Then the IRS dropped the indicator and the banks took on more risk, raising their high fees accordingly of course. Now there are no more RALs because every bank that was in that business dropped out (or was forced out). Refund anticipation checks aren't issued by the bank until the IRS has deposited the taxpayer's refund into the bank's account. Therefore the refund doesn't arrive any sooner than it would from a standard efiled return with direct deposit. The difference is that the preparer's fee is deducted from the refund and the bank forwards the client the remainder. So it's really just a way for the client to pay for tax prep out of the refund instead of upfront. If Block is charging up to $60 for the service, it smells like they are trying to recoup some lost revenue from now defunct RALs. The issue in the article cbslee posted is whether the fees are disclosed to clients so they are making an informed decision. There are fees attached to the debit cards too (as there were to RALs when they existed), but since those are bank products they are/were subject to disclosure laws.

Gain or loss on the structure will be calculated on Form 4684, which takes into the calculation the insurance proceeds. There may be gain or loss depending on basis, depreciation recapture, and what the insurance company eventually pays. You may not settle this until 2016. Eventual sale of the land will be on 4797. Had the exact same thing happen to a partnership that had two neighboring buildings burn, one salvageable the other totaled. The two original partners had zero basis. Six others had inherited their interests from six deceased partners so every one had a different basis. What a nightmare. If your client really doesn't want to rebuild, he should be advised to hang onto the insurance payment until the taxes are calculated. Assure him there will be some left for him.

I went to work today thinking I'd finish up four returns that each had one last bit of info to be plugged in, then after lunch dig into my ever growing stack of returns I haven't touched yet. Okay, first return had brought in the missing data then but I realized I didn't have her birth date. Called and left a message but haven't heard back. Next one had faxed me the HUD for a home sale, but I never got it. Took two phone calls and 400 emails to finally get the info I needed at 8PM. Next one was a gifted home basis thing and the attorney did a great job calculating that, but again no HUD so I could add the selling expenses. Got that one after the client came home from work. And then the one whose employer finally broke out the income earned in NY from the rest of the income, but I could not get our program to do it right (Ultratax). Finally had to override, which I hate to do but everything I tried had his entire income taxed in NY (no percentage applied, just all of it regardless of whether I separated it by amount, days worked, volume). Took over an hour to give up and override. So those four returns that were supposed to be done and gone by noon took up much of the day. I probably wouldn't have felt so frustrated if I hadn't just assumed I'd knock all four in no time. Well, I had an appointment and hoped that at least I could get that one out in a timely manner. Of course not, they had RR retirement benefits. I haven't done one of those since I took basic training. Needless to say that hour appointment lasted considerably longer. And the stack just grows and grows. I am going to give up on setting goals. And tomorrow (the first day of spring) we're not going to get ATXaholics's sun but MORE SNOW. Maybe the clients will leave me alone and I too will get some tax returns done.

One would think the subsidy for your client would be calculated based on her income before marriage and again after the wedding. Nope. It doesn't work that way. She either calculates her credit using their married filing joint income or, with the alternative calculation, dividing their joint income in half and using that as her income for purposes of determining what her credit should have been (if any). From reading the form itself I believe you only "allocate" when someone who is not on the parents' return is on the policy (like a 25 year old child still on their insurance). So the parents do the allocating. I've had this situation twice, and if the joint income (or half of it) is above 400% poverty level they will have to pay the entire credit back. There is no cap for over 400%. Came across that tidbit with married clients who apparently lied on the application or didn't understand it and understated their income. At $150k annual income, they aren't entitled to a subsidy yet they got one of over $1300 a month. It all gets paid back.

We've had five in our office so far this season. Clients not only have to file the 14039, but a police report, call the FTC, freeze their credit. Try filing the state by itself; if it too rejects they have to call the state and do whatever they tell them. It's a lot of work for the victims (and for you with all the paperwork and advice). Luckily your client wasn't one of those waiting for a big fat refund they already spent.

DNI = distributable net INCOME. The property is not income (albeit income producing). Old Jack is right--the 1041 reports income and what if any income was distributed, not distribution of assets.

And hardship only means they allow you to take the money out early. It does not mean you don't have to pay taxes on the money that was never taxed going in or penalties if you're too young to get away with it.

Jack, in some of the IRS resources on identity theft it states that taxpayers should attach the 14039 to the front of their paper filed return if it rejected because the SS number had already been used. That's what I've done this season--attach the 14039, then the 8948 (explaining why the return wasn't efiled with the reject code entered), then the paper return. If you learn about the other return filed with your SS from the IRS before you even try to file, then you file the 14039 where they instruct you to do so. Perhaps the agency is learning on its feet and decided it made sense to get the 14039 upfront to avoid all the back and forth correspondence we had to do last year. Something has got to change to make it harder for identity thieves to steal from the gov't and create huge headaches for taxpayer victims.

It appears that this notice is the result of what IRS's identity theft unit learned last filing season. One of our client's 2013 return efile rejected because his SS number had already been used. He sent in the Identity Theft Affidavit, called the IRS etc. Shortly thereafter he received a notice from the IRS that their records showed $187,000 in estimated payments that he hadn't claimed (and really did pay) so they were increasing his refund by that amount! We immediately faxed a note to NOT refund that amount, this was an ID theft case. That went to another unit that didn't know what the ID theft unit was doing, so he got more correspondence. To this day we don't know if the crook received a big bonus on that bogus return. The IRS did assure the client that his estimated payments would be credited to his account. This year we've seen one of the notices like DougO's asking if the taxpayer really filed the return. The IRS apparently realized that people don't just forget that they made $187k in estimates.

We've had 5 client with identity theft so far this season--3 whose SS numbers were already used and 2 who got 1099Gs from other states showing they got refunds for 2013 returns filed there in 2014. Last year we had 4 the entire season. Before that, we averaged 2 per season, all deceased (that was before Congress bent the freedom of information rules and allowed HHS to stop posting on the internet the SS numbers of everyone who died). Remember way back in the early days of efile when taxpayers had to put their last year's AGI on the 8879? Reinstating that requirement would eliminate much of this rampant identity theft. Or is that solution too easy?

Remember that you only pay back the credit if it equals or exceeds your gain. If he still owes $11k for the credit and makes a $10k profit on the sale, he pays back $10k. If he sells at a loss, no repayment required. I think the instructions to the form tell how to work it when couples split.

The credit card industry is now mandated to make the "fine print" no smaller than a 12-point font or something like that (i.e., no more fine print). Why don't they do that with tax reporting docs? And while they're at it, how about regulating the font size on OTC medicines and even cleaning supplies. They now have so many languages and legal requirements stuffed onto a 3" X 3" label that's it's impossible to tell is you're supposed to take a teaspoon or half cup of cough syrup, or whether you're supposed to rub the polish in and let it sit for 3 hours or just glaze the surface and immediately remove the residue. And how about the clients who don't email or fax unreadable docs but send them via pictures taken with their phones? Sometimes I get black on black, or numbers so broken up you don't know it's a number. Instead of struggling through this crap, it's time to take a stand and just tell the client we can't read it so they have to find another way to get it to us.

And of course this is the kind of problem they bring to you during the mad rush of tax season. They probably divorced months ago when you had the time to read through all their crap, court cases, state law, etc. (when you weren't learning about the ACA and repair regs). Now of course they want to get THEIR refunds so it's YOUR problem. I don't think so. Suggest an extension.

Basis in an IRA is not a "use it or lose it" situation. The clients had basis in their IRAs. If they contributed more after-tax, they increased their basis. If they took distributions and treated them as 100% taxable, they did not use up any of their basis. (Unlike depreciation, which is "allowed or allowable.) Just file an 8606 for the current year. I don't think the IRS keeps track of these forms anyway. They have no reason to because they want to tax the whole thing. It's up to your clients to keep records supporting their nondeductible contributions. I just did one of these where for a few years clients were taking distributions and filing 8606s to calculate how much was not taxable. Then for unknown reasons for a few years there were no 8606s and the distributions were 100% taxed. I just picked up basis where they left off--after all, they still have that much in their IRAs that was already taxed. Speaking of do-it-yourselfers, I have an appointment tomorrow with a new client. We aren't even taking new clients but this one was referred by a valuable client. The note says she already filed her 2014 and "screwed it up" so needs an amendment. I can't wait.....

We see a bunch of these coupons every year. Since no one in the office has the time to work on their own returns, we're tempted to use them ourselves. Or maybe bring a PIA return to them and let them do the work at a discount, bring it back to the office and charge the client full price. Or hand them to PIA clients and tell them that place can do their return cheaper. Whatever you do don't shred them....the possibilities are endless.

We've had lots of clients come back so they don't appear to be sheepish. Most return because the other guy has them owing too much. Our results are often not much better, but for some reason they feel more secure when the bad news comes from someone they already know and trust. A few return because of price or because the new guy messed up. We had one come back who has a very complex tax situation and owed a lot. From what I could see the preparer he left did an outstanding job and even taught me a few things when I looked up why they depreciated this item a certain way or where they got that number from. Our final product had the guy owing much less, but judging by the quality of work I'd be willing to say the other place simply hadn't finished yet. If you do good work, nurture your relationship with each client, and don't overcharge, don't feel that you have to justify your price. You are worth it. If they don't think so let them move on. We raised our prices quite a bit this year and the comments I've gotten were "no problem," "it's about time since we've been paying the same for so long," "don't mention it." Not one complaint so far.

Doesn't the $500 safe harbor apply only to units of property (like windows in a building or a motor for a piece of equipment)? The gym items are not units of anything. They are supplies, which have a safe harbor of $200. If each ball or mat costs less than $200, then count it as a supply. Otherwise, there's always Sect 179. But heed cbslee's warning that the deduction might not be needed in the first year of business but will be in later years.

I agree with cbslee. The tux is more like a uniform or costume not suitable for everyday wear and should just be treated as an expense. I have a DJ client who has three tuxedos (some weeks he has formal gigs Fri, Sat and Sun). I wrote them all off, write off new ones when he replaces them, and give him the expense for dry cleaning as well. Same with the fancy shirts and cumberbunds (often purchased in a color to match the bride's decor). I don't do this for regular suits and ties that he wears for less formal affairs because he could easily wear them elsewhere. I tell clients who want to write off their jeans and red t-shirts or waitstaff who want to take their black pants and white shirts because that's what their employer requires them to wear, NO. If you can wear it to the grocery store or tax office, no deal.

The advice to "file early" to prevent an identity thief from filing for you has been given by many sources, particularly after the Anthem breach. The problem is that the professional tax prep system does not have the capacity to file everyone early. We can hardly handle the crunch of returns coming in right now (with loads more to come). What would we do if ALL our clients give us their data the first week of February? Unless we can extend the number of hours in a day and the number of days in the week, and override the human need for food and sleep, there is just no way everyone can file early.

Something is going on with state tax filings by identity thieves. I am aware that last week so many states stopped accepting returns from Turbo Tax because of fraudulent or suspicious filings that the software company stopped filing state returns for a day. TT decided it had not been hacked but many prior users were responding to a fake email to "update your information" and voluntarily gave away their personal info, which the thieves then used to file bogus state returns. Not sure if I believe that, but what I find perplexing is why state returns? Why not go for the federal with its juicy refundable credits? Sure some states have those, but nowhere near the size of the federal EITC, education credits, ACTC, etc. Today a client showed me a 1099G from a state halfway across the country for a 2013 refund from a MFJ return. She is single, never even visited that state, but the name and address were correct (which is how she got the 1099 delivered). Another client who is a CT resident called when he got a refund check from CT (again correct name and address) but hasn't filed his return yet. I know CT added some new filters and anything that seemed abnormal was issued a check rather than direct deposit. In this case the thief was foiled because the real taxpayer got the stolen money. In our office we get 2-3 cases of identity theft every year. It used to be mostly deceased taxpayers. Last year it was four living clients. When a return rejects because the SS number already filed, we usually delete the federal efile and go ahead and efile the state. This has always worked until last year, when one of our victim's state return rejected as well because the taxpayer had already filed. Anyone have any idea why identity thieves are suddenly going the state route?

Today between appointments I finished some returns dropped off Feb 3. Doesn't sound too bad, but there are now 20 in my in-box and lots of appointments in the coming days. Four were added just today, so who knows what their turn around time will be. Anyone notice that a lot more of these early filers owe? I keep stack of envelopes for the federal and state payment vouchers in my desk but I usually don't use many of them until March. This year it seems that I hand one out for nearly every return. I've already done the ACA form for clients who lacked insurance for a few months of the year. I just did one for clients who got married during the year and one had an insurance subsidy. Anyone notice that the Pub that is supposed to help us through these unusual situations is still "under development"? I actually dug up the Regs and followed the example with my own math (charts for poverty level percentages, middle cost silver plan, etc. spread all over my desk). When I was done I checked it for theory, which is about all I got out of the myriad CPE hours I took on the topic. Then I had to figure out how to make the program do it right. I just wanted to ease into the ACA--you know, check the box that everyone was insured for my first dozen returns and then maybe someone with a month or two lapse. The complex situations that our courses just breezed over (because not even the curriculum writers could figure it out) just had to be my initiation to the ACA.

I think I'm reading this differently than everyone else. Your client put in windows for a client, which cost him $1978 and the rest was labor. The windows are COGS. (Beginning inventory 0, purchases $1978, ending inventory 0). Supplies are things like nails, caulk, maybe some paint--stuff he keeps on hand that aren't specific to a single job. No election needed.

Yes, if not remarried.

I too feel inundated. It seems like just yesterday we were preparing W2s and trying to coerce clients into getting the data needed for the 1099MISCs. Then tax season just fell out of the sky, and the mail and the drop-offs and the appointments just exploded onto the scene. IRS said today that the number of returns already filed is ahead of last year. I don't remember being this busy this early in Feb so they may be right. On the other hand, refund identity theft is on the rise, and those thieves file early to get in before the real person does, so I hope those early statistics don't just reflect an increase in fraudulent returns. I don't think I've ever had 70 returns in my in basket like rfassett does. If I did, I think I'd stop the world and get off--take a vacation or something. In our office we are not filing 3115s for the $200 and $500 elections. They are annual elections, and unless you are filing them retrospectively 3115 is not required. Just elect that treatment and be done with it. Also not needed when clients didn't make a structural improvements to property (and you're not going back to adopt the new regs). If they replaced a roof or HVAC system, that's treated differently under the new regs and you will need 3115 (and an extension if you have 70 returns in your in basket). Can't wait to see how the IRS clarifies this. We've all read millions of pages, gone to hours of courses, and heard the opinions of very smart people at major law and accounting societies. Yet we still aren't sure. Talk about complexity of the tax system.